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Market

Practice MCQs under Market. 91 available Open paginated MCQ list →

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1.What does the term 'tax incidence' refer to?

The act of transferring the tax burden to a different party.The design or framework of the tax system.The final allocation of who bears the tax burden.The assessment of how a tax affects jobs and production.

2.Value Added Tax (VAT) is best classified as which type of tax?

Fixed amount taxExcise taxTax on incomeTax based on valueProperty tax

3.What do economists refer to as Black Markets?

Markets where products are traded at prices exceeding the legal or official limits.Situations where buyers or sellers evade paying the required taxes.The sale of prohibited or unlawful goods.Economic activities that are excluded from GDP calculations.

4.What happens when the market price falls below the equilibrium price?

The quantity demanded exceeds the quantity suppliedThe quantity demanded is lower than the quantity suppliedDemand is smaller than supplyThe quantity demanded matches the quantity supplied

5.When is it essential to implement rationing for a product?

When the quantity supplied is greater than the quantity wantedWhen there is an excess of the product availableWhen the product's demand does not change with priceWhen the demand for the product surpasses its available supplyWhen prices are fixed by the government

6.What is a price ceiling?

A government-imposed limit on the highest price sellers can charge for a productThe gap between the original equilibrium price and the new equilibrium price following a drop in supplyA government-mandated minimum price that sellers are required to charge for a productThe lowest price that buyers are prepared to pay for a product

7.What does nationalisation refer to?

When the government transfers assets to private companiesWhen the government prohibits a certain productWhen the government assumes ownership of an industryWhen the government imposes taxes to increase the cost of a product

8.What typically occurs in a free market when a positive externality is present?

The good or service is consumed less than the socially optimal level.The good or service is consumed more than is efficient.Authorities might impose taxes to reduce output.Reducing production could improve overall societal welfare.

9.Why might farmers' incomes decrease when there is an increase in supply in an agricultural market?

Because the supply responds strongly to price changesBecause demand does not change much with price variationsBecause the government purchases all surplus produceBecause all products are sold at a fixed maximum priceBecause farmers reduce their production voluntarily

10.Which statement best describes merit goods in a free market economy?

Completely absent from the free market systemSupplied in insufficient quantities within the free marketAvailable in excessive amounts in the free marketOffered at no cost to consumers

11.What happens when the government sets a price below the market equilibrium level?

A surplus occurs in the marketThere is more supply than demandDemand exceeds supply, causing a shortageThe market remains in balanceNo change in market conditions

12.What is the typical outcome for the provision of a public good in a free market system?

It will be supplied in insufficient amounts by the free marketIt will be supplied in excessive quantities by the free marketIt will not be supplied at all by the free marketIt does not involve any opportunity cost

13.What is the expected effect on equilibrium price and quantity when the demand for a product rises?

Both equilibrium price and quantity will riseBoth equilibrium price and quantity will fallEquilibrium price will rise while quantity fallsEquilibrium price will fall while quantity risesNo change in either equilibrium price or quantity

14.When will a change in supply influence the price more significantly than the quantity supplied?

The supply's price elasticity equals 3The supply's price elasticity equals 0.2The supply's price elasticity equals 2The supply's price elasticity is infinite

15.When a demand curve shifts, under which condition will the change in price be more significant than the change in quantity?

Supply responds very little to price changes (inelastic supply)Supply responds moderately to price changes (elastic supply)Supply is perfectly responsive to price changes (perfectly elastic supply)Supply is infinitely responsive to price changes (supply elasticity equals infinity)None of the above

16.How can consumer surplus be best defined?

The amount a buyer is prepared to pay for one unitThe expense incurred to produce one unitThe earnings gained by a companyThe gap between what a buyer is willing to pay and the actual price paid

17.What can lead to a movement along the supply curve?

An advancement in production methodsAn increase or decrease in the number of suppliersA variation in consumer demandA fluctuation in production expenses

18.What can trigger a movement along the demand curve?

Variation in consumers' incomeAlteration in the quantity of buyersModification in promotional effortsA change in the supply curveA change in consumer preferences

19.Given a demand curve that slopes downward and a supply curve that slopes upward, what factor can lead to a rise in the equilibrium price?

A decrease in consumer demandAn expansion in the quantity suppliedAdvancements in production methodsA growth in consumer demandA reduction in production costs

20.What is the effect of a decrease in production costs on the supply curve?

Cause movement along the supply curveCause a shift in the demand curveCause the supply curve to shiftResult in an increase in quantity supplied along the curve

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